Intermountain
Gas Company customers received their sixth consecutive decrease in gas rates
effective today due to a decline in the cost of gas the company buys for its
customers and increased gas supply.

The
decrease will come in two components: a reduction in monthly bills effective
today as a result of the lower gas prices and a one-time bill credit in
December.Combined, those adjustments
result in a decrease of 7.1 percent for the average customer.

The yearly
Purchased Gas Cost Adjustment (PGA) projects gas prices for the next 12 months
and either surcharges or credits customers the difference between the
projection and the actual cost. Sometimes the PGA is adjusted more than once a
year if gas prices materially change.

The variable
portion of customer rates is based on the Weighted Average Cost of Gas or
WACOG, which makes up about half a customer bill. With this application, the
WACOG drops from 41.8 cents per therm to about 33.5 cents per therm, as low as
it has been since 2002. The WACOG represents about half the total customer
bill, which is now about 66.8 cents per therm during the winter months and 70.2
cents from April through November for a customer who uses natural gas for both
space and water heating. For that customer, the average bill will decrease by
about $1.51 per month. A customer who uses natural gas for just space heating
will see a decrease of about 17 cents per month. A commercial customer will see
about a $6.46 per month decrease.

In addition
to the $6 million price reduction as result of lower gas prices, a one-time
credit totaling $11.9 million will be included on customers’ December
bill.For residential customers who use
natural gas for both space and water heating the one-time credit will be about
$29.85.Residential customers who use
natural gas for space heating only will receive a credit of about $19.40.The average December credit for commercial
customers is about $129.80.

The
commission said the credit will help customers during a time of year when
natural gas bills are highest. “Instead of embedding the value of the credit in
rates throughout the coming year, the single credit method will allow customers
more immediate rate relief during a time period when natural gas usage is
typically nearing its peak.”

The are
several other significant factors in the overall reduction: 1) $3.7 million in
benefits generated by release of some pipeline transportation capacity, 2) $4.8
million attributable to the collection of pipeline capacity costs, a true-up of
expenses from the 2011 PGA and capacity release credits and 3) a $1.3 million
deferred credit balance, which is the difference from the commodity costs
Intermountain actually paid for natural gas and the WACOG that was included in
rates.

The commission
did give the company authority to surcharge customers for Lost and Unaccounted
for Gas, which reduced the total credit allowed customers by $2 million.